Mortgages: first-time buyers, refinancing and home equity
A mortgage is likely the largest loan you will take, so small differences in rate and fees add up to large sums over the life of the loan.
First-time buyers
Common options include conventional loans, FHA loans with lower down payment requirements, VA loans for eligible service members and veterans, and USDA loans in eligible rural areas. Many states and cities also run down payment assistance programs.
Comparing offers
Ask several lenders for a Loan Estimate on the same day for the same loan amount and term. Compare the APR, closing costs, lender fees and any discount points, not only the interest rate.
Refinancing
Refinancing replaces your current mortgage with a new one, usually to get a lower rate, change the term or take cash out. Closing costs mean it pays off only after a break-even period, so it suits people who plan to stay in the home.
Home equity lines of credit (HELOC)
A HELOC lets you borrow against your home’s equity as needed, usually at a variable rate. Your home is the collateral, so missed payments put it at risk.
Reverse mortgages
Available to older homeowners, a reverse mortgage converts home equity into payments without monthly mortgage payments. The loan is repaid when the home is sold or the borrower moves out or dies. Federally insured reverse mortgages require counseling with an approved counselor before you apply.
Before you commit
Get your credit report in order, know your budget including taxes and insurance, and read every fee on the Closing Disclosure before signing.